Friday, January 15, 2010

This Time They Got It Right

It isn't often that I agree with the editorial board of theWashington Post, but this is one of those times. The subject is the practice of major pharmaceuticals of paying lesser companies to keep generic drugs off the market. That practice is allowable under existing law and costs US consumers, including the federal government, billions of dollars in higher drug costs.

A LOOPHOLE in existing law allows manufacturers of brand-name drugs to pay competitors to keep cheaper, generic versions off the market. If there's to be health-care reform this year, it ought to close that loophole.

Such "pay-for-delay" schemes cost consumers an average of $3.5 billion a year in potential savings, according to a recent report by the Federal Trade Commission. The federal government also loses by being forced to pay billions for higher-priced medications needed by patients covered under government health insurance programs. ...

...Congress in 1984 passed the Hatch-Waxman Act. It allows a company to market a generic "bio-equivalent" version of a brand-name drug if it does not infringe on the patent or if that patent is deemed invalid. The idea was to promote competition that could reduce drug prices. But it hasn't worked that way -- because brand-name manufacturers have been paying generic drug makers to keep their products off the market.
[Emphasis added]

The brand-name companies may spend an enormous amount of money in research and development, but they also have the protection which patents accord. That should be enough. If the pharmaceuticals want to cut costs, perhaps they should consider cutting back on advertising and marketing, especially the money spent wooing medical care providers to promote the new drugs.

As the editorial points out, the House version of the health care reform bill bans the practice outright. That's the version which should remain in the final bill.

Nicely done, WaPo.



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